Tuesday, 30 September 2014

Research and Development growth in the right direction

New Zealand's R&D spending by sector, 2006-2012. From Statistics NZ
In this week's Hutt News the editorial seems to make the case (again) for R&D tax credits - as opposed to National's policy of expanding grants through the likes of MBIE and the Hutt Valley's Callaghan Innovation.

The editorial argues that private enterprise investment in R&D is relatively low in New Zealand, and this is harming New Zealand's economy long-term as our businesses aren't adding as much value to our exports as we could. This is a concern the government shares.

Through initiatives such as Callaghan Innovation and new forms of company incubators, business investment in R&D has greatly expanded. According to Statistics NZ's Survey of Research and Development, overall expenditure on R&D has grown by 23% since 2008 to $2.6 billion. Critically, private sector expenditure has grown by 31% over the same period to $1.2 billion.

This is an excellent trend in the right direction, but more needs to be done. We still lag behind other small economies in terms of the percentage of our GDP spent on R&D. Despite the recent growth we've experienced, our total spend is 1.27% of GDP, versus the OECD average of 2.38%. We're heading in the right direction but it is critical for New Zealand's future that we continue on this path.

Spending on R&D by sector, 2008 - 2012:

 $ million  2008 2010 2012 % change
 Private sector   $       913  $       971  $     1,193 31%
 Government   $       584  $       615  $       596 2%
 Universities   $       643  $       802  $       836 30%
 Total   $     2,140  $     2,388  $     2,625 23%

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